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Nintendo Switch (Official Thread)

The press conference was held to announce a partnership between Nintendo and Japanese mobile game specialist DeNA to create mobile games based on Nintendo's intellectual property.

Nintendo also plans to create a new membership service, with DeNA, that will work across all Nintendo hardware, mobile devices and PC.

It was while announcing this new membership service that Iwata mentioned the new NX hardware.

Here's the direct quote from Iwata, which we captured and published in video form below.

"Nintendo, together with DeNA, will jointly develop a new membership service, which encompasses the existing Nintendo 3DS, Wii U, the new hardware with a brand new concept NX, smart devices and PCs."

At this stage it's hard to tell what the NX is, exactly, but in an image published on Nintendo's official website, it's described as a "dedicated game system", which suggests a home console of some kind. We're told more information will be revealed next year.

As proof that Nintendo maintains strong enthusiasm for the dedicated game system business, let me confirm that Nintendo is currently developing a dedicated game platform with a brand-new concept under the development codename "NX". It is too early to elaborate on the details of this project, but we hope to share more information with you next year.

Also, Iwata said Nintendo's new membership service would play a key role in NX.

Nintendo, together with DeNA, will jointly develop a new membership service which encompasses the existing Nintendo 3DS and Wii U systems, the new hardware system with a brand-new concept, NX, and smart devices and PCs, and Nintendo will be the primary party to operate this new membership service.
Unlike the Club Nintendo membership service that Nintendo has been operating, the new membership service will include multiple devices and create a connection between Nintendo and each individual consumer regardless of the device the consumer uses. This membership will form one of the core elements of the new Nintendo platform that I just mentioned.

It reminds me of the "third pillar" concept when the DS joined the GameCube and GBA, except now the NX is the sixth. My initial thought was that this is going to be a Nintendo tablet, a kin to a Wii U Gamepad without the Wii U, but that is purely speculation on my part and hopefully selling it short. The "membership service" obviously brings to mind PS+, though it doesn't appear quite that simple.

edit: If you'd like to watch the whole event, this appears to be a full translation:

TOKYO—Nintendo Co.’s Mario the plumber is finally getting some modern tools—including the smartphone.

The company dropped its long-standing aversion to mobile gaming, saying Tuesday that it would develop videogames for smartphones based on its classic characters.

In a surprising about-face, Nintendo struck a partnership with DeNA Co., a Japanese game provider, under which the companies will exchange ownership stakes and set up a new mobile game platform.

Nintendo shares closed 28% higher in New York Tuesday.

Until now, Nintendo had clung to its traditional, console-based business model, refusing to license its characters for mobile use for fear it would undermine the value of its rich catalog of games.

That strategy has come at a steep cost, analysts say, because games played on smartphones, tablets and other portable gadgets are providing much of the industry’s growth.

“The company seems to have totally changed its mind-set, after having resisted against mobile game development, publicly complained about the low quality of content in mobile and played down its role in the game world overall,” said Serkan Toto, a Tokyo-based game consultant. “This is about the most drastic, bold shift in strategy Nintendo could have undertaken.”

Nintendo isn’t giving up on consoles. The company is planning a new one, code-named NX, Nintendo President Satoru Iwata said at a news conference Tuesday. But the mobile partnership could help it break into markets where its consoles have struggled, he added.

“By tapping into the smartphone we can increase the number of Nintendo fans,” Mr. Iwata said. “No companies in any industries can survive if they fail to adjust to changing market environments.”

Previously, Mr. Iwata repeatedly and adamantly ruled out a shift to mobile. In an interview with The Wall Street Journal in 2013, he said: “If we think 20 years down the line, we may look back at the decision not to supply Nintendo games to smartphones and think that is the reason why the company is still here.”

But meanwhile the smartphone gaming trend gathered steam. Newzoo, a market research firm, estimates that mobile games generated $25 billion in revenue in 2014, up 42% from a year earlier. This year mobile games will replace consoles as the largest game segment, the firm said.

The alliance between Nintendo and DeNA includes a cross-shareholding. Nintendo, which is based in Kyoto, is buying a 10% stake in DeNA for Ľ22 billion ($182 million). Tokyo-based DeNA is acquiring a 1.24% stake in Nintendo for the same amount.

The companies said they would develop a new game distribution platform for introduction this autumn. It will be the exclusive mobile outlet for Nintendo games and be compatible with other devices, including Nintendo’s game consoles.

Mr. Iwata said the company hopes to reach hundreds of millions of new users via the service, which will be made available globally. He said Nintendo would take the lead on developing new games for it, while DeNA will operate the technical side. Revenue will generally be split 50-50, he said.

Nintendo has been under pressure to develop videogames for smartphones because sales of the company’s game consoles and hand-held devices have been disappointing. Meanwhile Sony Corp. has sold more than 20 million PlayStation 4 systems, and it has begun a service that lets owners of console games play them on mobile devices.

In addition to Mario, Nintendo franchises include Pokémon, Metroid and Donkey Kong, some of which were originally developed for arcade games.

Mr. Iwata said there would be “no limitations” on which titles could be used in the partnership with DeNA. The company said it would develop new games based on its characters, rather than adapting existing console games, in order to optimize the mobile experience.

The company runs a mobile-game platform called Mobage that developed a wide following in Japan during the pre-smartphone era. But it has struggled to expand outside Japan.

“It is DeNA which looks to be the best placed in this deal as they have nothing to lose, not in terms of pricing nor franchise dilution,” Mr. Anvarzadeh said in a note to investors.

One reason Nintendo clung to the console strategy for so long is that many games played on mobile devices are distributed free, with the game providers generating revenue from in-game purchases—when, for example, a player buys enhanced powers.

Nintendo was concerned that it would lose revenue from sales of console games and that it might annoy players with in-game sales prompts.

Nintendo and DeNA provided few details of the business model for the new game platform, but Mr. Iwata appears to have softened his opposition to free games.

“I’m not totally negative about the free-to-play model, though Nintendo won’t be happy with too many in-game purchases,” he said.